To do this, he's cutting his own nearly $1 million annual pay to
$70,000, as well.

For contrast, federal minimum wage in the US is $7.25 an hour,
which comes out to about $15,000 a year for someone working a
typical 40-hour week. Seattle, where Gravity Payments is based,
started phasing in a minimum wage of
$15 an hour in early April.

Price is being widely lauded for his decision not only because
it's a feel-good story that makes him seem like an awesome guy
and desirable boss, but also because most CEOs cling tightly to
their pay — which has risen steadily over the years. By some
estimates,
CEOs in the US make 354 times as much as their average
employees.

Notable exceptions include Rick Holley, the CEO of Plum Creek
Timber Co., who gave back a stock bonus worth about $2 million in
2014; Lenovo CEO Yang Yuanqing, who shared $3.25 million of his bonus with workers in
2013; and Next CEO Lord Wolfson, who gave his $3.7
million bonus to his employees the same year.

Price told the New York Times he started thinking about making
such a massive change in his company's pay rate after reading an
article about a 2010 study by
Daniel Kahneman and Angus Deaton that found people's
happiness levels off around $75,000 a year — meaning as they
earned more, they didn't get measurably happier.

This is one of the most interesting plot points in the story of a
CEO giving up his million-dollar compensation to better pay his
workers.

Since the 2010 study came out,
different numbers have emerged as the benchmark for happiness. In
a 2012 survey of 13 countries,
CNBC reportsit was found
that the needed income to be happy was around $161,000, ranging
from $85,781 (Germany) to $276,150 (Dubai).

In 2014,
Doug Short from Advisor Perspectives pointed out that because
the 2010 paper analyzed 2009 data, thanks to inflation, $75,000
doesn't hold up a few years later. He says that the new number
for the US, based on purchasing power, is $83,000.

From the examples cited above, you might draw the conclusion that
there's no such thing as an amount of money that will universally
increase people's levels of happiness. And if that's the case,
Price's actions may be based on a flawed premise.